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LINCOLN — A panel of state lawmakers illustrated Monday night how serious they are about reducing property taxes, discussing favorably the possibility of raising the state sales tax by half a cent to offset property taxes.

The sales tax hike was among several ideas discussed during an executive session of the Legislature’s Revenue Committee, which has pledged to craft a package of bills to reduce property taxes.

Farmers have seen their property taxes skyrocket in recent years because of increases in land values, and they now face declining profits because of low crop prices and the trade conflict with China. Homeowners are also starting to see valuations and taxes rise.

A sales tax increase, if adopted, would most assuredly prompt a veto by Republican Gov. Pete Ricketts, who has opposed raising taxes or shifting taxes to provide property tax relief. And Nebraska voters, in the past, have taken out their wrath on lawmakers who increase taxes.

State Sen. Lou Ann Linehan of Elkhorn, who chairs the Revenue Committee, said a general sales tax hike is the fairest and simplest way to offset property taxes. She emphasized that all new revenue raised would not result in “new spending,” but would be devoted to property tax relief “for all.” The senator said she wants the committee’s package to also control the growth of government spending and resolve “disparities” in state aid to K-12 schools, though no details on how that would be accomplished were discussed Monday.

It was the first time the eight members of the committee had discussed which ideas they supported, and Linehan described the group as “mostly in agreement.”

“Right now, the biggest industry in the state (agriculture) is in trouble,” she said. “We’re not going to grow if they’re in trouble.”

In general, the committee discussed devoting about $500 million in new revenue to property tax relief and directing most of it to increased state aid to K-12 schools.

Right now, the state devotes about $1,000 less in state aid per student than Iowa and about $3,000 less per student than both Kansas and South Dakota, Linehan said. That, in part, allows those states to have lower property taxes, senators said.

Among other tax changes discussed were removing sales tax exemptions on pop, bottled water and candy; costs of storage units and lawn care; and admissions to zoos, including Omaha’s Henry Doorly Zoo and Aquarium.

There was also talk of raising taxes on cigarettes but avoiding an increase that takes the tax above $1 per pack. Right now, Nebraska charges 64 cents per pack, compared with $1.36 in Iowa, $1.29 in Kansas and 17 cents in Missouri.

The state sales tax rate has not been increased since 2002, when it rose from 5 percent to 5.5 percent. If it was raised to 6 percent, it would match Iowa’s state rate and be slightly lower than Kansas’ rate of 6.5 percent. Missouri’s state sales tax rate is 4.2 percent.

The state sales tax rate does not include local sales taxes, which amount to 1.5 percent extra in many Nebraska communities, including Omaha.

NU makes its case to Legislature, says larger funding increase will help ‘grow this state’

LINCOLN — The University of Nebraska made its best argument Monday for strong state financial support, saying a powerful NU means a robust workforce and a sturdy Nebraska.

The NU system’s leadership asked the Legislature’s Appropriations Committee for a more generous budget than is proposed by Gov. Pete Ricketts.

Ricketts has recommended a cumulative boost in state money for NU of about $52.5 million over the next two years, or increases of roughly 2.8 percent and 3.5 percent. The Appropriations Committee’s preliminary budget is similar to Ricketts’.

NU system leaders said the increase proposed by the governor will leave the university close to $5 million short for utilities and inflation. NU seeks a 3 percent increase the first year and a 3.7 percent boost the second year. NU President Hank Bounds and NU Board of Regents Chairman Tim Clare of Lincoln asked the committee to fully fund NU’s request.

“I’m asking you … to find a way to make the university a priority,” Clare said.

Bounds’ request focused on the next two years, but his comments addressed the university’s long-term future and, he said, the state’s. The university must be competitive with the public universities of other states to keep Nebraska’s strongest students in state, Bounds said.

As it is, Bounds said, half of Nebraska’s highest-performing high school graduates, as measured by the ACT test, leave the state. Meanwhile, he said, the state has a serious shortage of skilled workers.

Three budget cuts over the past two years have weakened the university, Bounds said.

“Limited resources mean we are not as competitive as we could or should be,” he told the Legislature’s budget-setting committee.

“Your university is ready to run faster, to be more nimble, to be bigger and bolder and more creative about producing the workforce, the research and the economic activity you need to grow this state,” he said.

Even if NU’s request were fully funded, Bounds said, NU’s state funding would only allow it to hold its ground financially. It wouldn’t enable NU to increase its competitiveness with other public universities, expand programs, build new ones and pursue its true aspirations, he said.

NU started the 2018-19 year with state money for operations totaling $574.7 million. The next biennium includes 2019-20 and 2020-21.

NU includes campuses in Omaha, Lincoln, Kearney and Curtis. The Nebraska State College System and community colleges are expected to address the committee Tuesday afternoon.

Ricketts spokesman Taylor Gage said in an email that the governor proposes to fully fund NU’s and the state colleges’ salary and health benefit costs over the next two years.

They may use tuition and fees to support further budget growth, Gage said. He said the two-year colleges may also raise tuition. The community colleges also tap property taxes.

The Appropriations Committee appeared, based on most of its members’ questions, to be generally sympathetic with NU. State Sen. Anna Wishart asked NU to be more ambitious with its requests. When NU stands before the committee next year, she said, “really come in with what these aspirations are.”

Over the past couple of years, Bounds said, NU’s “budget response teams” have trimmed $22 million annually from travel, information technology, human resources, energy, public relations and other areas. There have been many other cuts as well, he said.

This doesn’t allow the University of Nebraska-Lincoln to compete academically with its Big Ten rivals, he said. NU lags behind some other Big Ten schools in state-funded capital investments, state-supported scholarship funding and other items, he said.

State Sen. Kate Bolz of Lincoln said there is also an opportunity cost, or loss of potential benefit, by not investing in programs.

When Bounds was asked to prioritize NU’s needs, he said they would include more financial aid support to retain strong Nebraska students, better backing of engineering and technology programs, and increased support for first-generation students.

Not all of the senators on the panel expressed support. Sen. Steve Erdman of Bayard, who frequently criticizes the university, asked, when NU states that it has a $3.9 billion impact on the state, how does it arrive at that figure?

Bounds said NU uses an independent analyst and said the impact now is actually about $4.5 billion. “I’ll give you the study so you can read the details,” Bounds said.

Erdman also asked about the elimination of the University of Nebraska at Kearney’s baseball team. And he referred to professors who have protested against gun rights and other causes, saying professors should be held to the same high standards of conduct that Husker football coach Scott Frost holds his players.

Bounds said those are personnel and legal matters.

Nebraska Legislature begins debate on LGBT job discrimination ban

LGBT discrimination. Debate on a bill that would ban job discrimination on the basis of sexual orientation and gender identity began Monday with an apology from the sponsor of Legislative Bill 627.

State Sen. Patty Pansing Brooks of Lincoln directed her remarks to friends, constituents, co-workers and “my darling family,” a reference that included her gay son.

“Many of us care about you and embrace you,” she said. “I apologize in advance for any hurtful or hateful things you may hear today.”

LB 627 is the latest attempt to give lesbian, gay, bisexual and transgender workers the same protection against job discrimination that current law provides for people based on race, color, religion, sex, disability, marital status and national origin.

Supporters cast the issue as one of both human rights and economic development. Sen. Adam Morfeld of Lincoln said he has law school classmates who have left Nebraska because the state does not provide protections.

But opponents said the bill would interfere with the rights of conscience of businesses and employers. They also said it would open up employers to lawsuits.

While saying that no one should be a second-class citizen, Sen. Suzanne Geist of Lincoln argued that government should not dictate to businesses whom they should hire.

“Businesses have the right to be free to run their businesses, their private businesses, according to their beliefs,” she said.

Lawmakers adjourned Monday without reaching a vote on LB 627. Debate on the bill is slated to resume Tuesday.

Texting and driving. The number of Nebraska drivers barreling down the road with smartphone in hand has reached epidemic proportions and the number of resulting crashes is rising, a legislative committee was told Monday.

Safety advocates and law enforcement officials called for Nebraska to join 46 other states that make texting while driving a primary offense. They told the Transportation and Telecommunications Committee that enforcement, not just education, is needed to change drivers’ behavior.

“Anyone that drives can see people each day not paying attention while using a cellphone,” said Fred Zwonechek, who recently retired as the state highway safety officer. “We all see it, and we all think it’s not us.”

He and others testified for LB 620, introduced by Sen. Rick Kolowski of Omaha, and LB 40, introduced by Sen. Robert Hilkemann of Omaha. Both would allow law enforcement officers to pull over drivers for violating the state law against texting while driving.

Current law bars people from using a smartphone or other wireless electronic device to read, write or send a written communication while driving. But violations are secondary offenses, meaning that officers can issue a ticket only if they pull over a driver for a separate traffic violation.

Spike Eickholt, testifying for the Nebraska Criminal Defense Attorneys Association, said existing law sets the right balance of promoting safety while protecting drivers’ rights not to be pulled over arbitrarily. He raised concerns about how drivers might defend themselves in court, noting that phones can light up for any number of reasons.

Internet sales tax. After a brief debate Monday, state lawmakers gave initial approval to a bill that would allow Nebraska to start collecting sales taxes from out-of-state Internet retailers.

LB 284 would go into effect on April 1 if legislators give an OK during two more rounds of debate and Gov. Pete Ricketts signs it into law.

That seems highly likely, given the 44-0 first-round approval on Monday and the governor’s intent in his budget to use the estimated $30 million to $40 million in new annual revenue to increase the state property tax credits that are given to farmers, ranchers, homeowners and other landowners.

The bill requires online retailers to collect sales taxes once they have $100,000 worth of sales or at least 200 transactions in Nebraska. It would also require Internet marketplaces, such as Amazon, Etsy and eBay, that offer goods from several vendors to remit taxes once they reach those thresholds.